Study of Implications of FDI on Indian Economy

Abstract

Foreign direct investment (FDI) is always contributing in the positive growth toward the economy of one country due to the investment by another country or country’s personnel’s. The effectiveness and efficiency of Global economy depends upon the investor’s perception, if investment seen with the purpose of long terms investment in the social-economical development then it is said that the investment contributes positively towards global economy, if it is short term for the purpose of making profit then it may be less significant than that long term and disinvestment leads negative effect. The FDI may also be affected due to the governmental trade barriers and policies for the foreign investments and leads to less or more effective toward contribution in economy as well as GDP and GNP of the country.

In this paper, our aim is to point out the negative and positive implications which affect the economic scenario and also measure the level of predominance by the factors for economic contribution of particular country with special reference to India. FDI seen as an important catalyst for economic growth in the developing countries, It affects the economic growth by stimulating domestic investment, increasing human capital formation and by facilitating the technology transfer in the host countries. The main purpose of the study is to investigate the impact of FDI on economic growth in India, from the period of 1990 to 2010.

In past few decades, foreign investment has rapidly increased worldwide and has enhanced economic growth in developing countries. Many developing countries like India fear that by opening up markets to competition and foreign investment without restriction, they will lose control of their strategic industries and influence on national security, social stability and economic development.

This article will also be examined current international investment regime and their relation with Indian economy. This article hopes to find a new position for effectiveness and efficiency of Indian economy through integrated global market by FDI.

Misra, Srikant, Study of Implications of FDI on Indian Economy (February 26, 2012). FDI and Indian Economy communicated in Postmodern Opening Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1971243